Restoring the American Dream: HAMP extension offers homeowners Hope
BY Keith Loria
Monday, April 23, 2012
The American Dream of owning a home has been shattered for many due to the collapse of the housing and mortgage markets over the last few years. However, President Barack Obama recently extended the Home Affordable Modification Program (HAMP), which can help many homeowners refinance and take advantage of historically low interest rates.
HAMP also offers incentives to mortgage lenders to encourage them to refinance and modify existing mortgages by lowering interest rates and reducing mortgage balances to the current value of the property.
Launched by the federal government in 2009, HAMP was slated to expire on Dec. 31, 2012, but was extended for one year until Dec. 31, 2013. The extension of the program included an expansion of the eligibility rules to make it available to even more homeowners.
It is believed that millions of additional homeowners will now be eligible to take advantage of the federal program to bring down the costs of owning a home and even help many avoid foreclosure altogether.
In February, new eligibility criteria were released to mortgage lenders and servicers and homeowners may begin submitting applications under the new rules in May. Until then, homeowners can submit applications for modifications under HAMP to their lenders under the existing eligibility guidelines.
There are several changes to the HAMP guidelines that homeowners should be aware of:
• Homeowners found to be ineligible under the current debt-to-income ratio of 31 percent may now be eligible under the new criteria.
• Previously, non-owner occupied homes and owner-occupied homes with tenants were not eligible. However, the new guidelines would allow tenants in part of the home as long as the home is owner-occupied or the owner intends to take occupancy. It is believed that approximately 700,000 landlords will be eligible under the revisions to HAMP.
• People who were approved for a HAMP trial period but did not make the payments as scheduled would be eligible for consideration for a modification under the new eligibility criteria.
• Homeowners who missed payments under an approved HAMP modification, as opposed to a trial period, would be eligible to reapply under the new rules.
In addition to the HAMP extension, the Obama administration announced that it would triple incentives to owners of mortgages that reduce home loan debt and expand eligibility to borrowers struggling under the weight of other liabilities such as medical bills. The extension will apply to all loans, including those held by Fannie Mae and Freddie Mac.
Courtesy of RISMedia
